Sony is set to buy the Gaikai cloud gaming service in a deal worth £242m.
The company will allow the service - which streams games to players rather than having them as downloads or physical media - to be used on PlayStation 3 consoles.
Gaikai is one of the main cloud gaming services with OnLive being another significant player.
Sony will run Gaikai's data centres and the infrastructure behind its service.
David Perry, Gaikai's Northern Ireland-born founder, said: "My team has worked incredibly hard for this. Sony has an exciting vision and we want to be part of it."
Streaming offers a new way of delivering gaming content that does not rely on downloading games to a hard drive or buying a physical copy on DVD or Blu-ray. Instead, the games are stored "in the cloud".
Players choose which games they want to play and they start instantly, streaming online to their consoles.
When a gamer presses a button on their controller, keyboard or mouse, information is sent to the cloud servers on which the game is running.
At the recent E3 conference in Los Angeles, OnLive, which launched streamed gaming in 2010, said it was going to offer its service as a built-in function within the G2 series of LG Smart TVs, thereby cutting out the need for any console.
Gaikai, launched a year later, announced a tie-up with Samsung although it is not certain if this will go ahead.
Andrew House, President and Group CEO of Sony Computer Entertainment said: “By combining Gaikai’s resources including its technological strength and engineering talent with Sony’s extensive game platform knowledge and experience, Sony will provide users with unparalleled cloud entertainment experiences
“Sony will deliver a world-class cloud-streaming service that allows users to instantly enjoy a broad array of content ranging from immersive core games with rich graphics to casual content anytime, anywhere on a variety of internet-connected devices.”